HR 1333, the Business Method Patent Improvement Act of 2001.
Sponsors: Rep. Howard Berman (D-CA) and Rep. Rick Boucher (D-VA).
Date Introduced: April 3, 2001.
Source: Office of Rep. Berman. Tech Law Journal converted a PDF copy into HTML.

107TH CONGRESS
1ST SESSION

H. R. _____

IN THE HOUSE OF REPRESENTATIVES

Mr. BERMAN (for himself and Mr. BOUCHER) introduced the following bill; which was referred to the Committee on __________

A BILL

To amend title 35, United States Code, to provide for improvements in the quality of patents on certain inventions.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Business Method Patent Improvement Act of 2001’’.

SEC. 2. DEFINITIONS.

Section 100 of title 35, United States Code, is amended by adding at the end the following:

‘‘(f) The term ‘business method’ means—

‘‘(1) a method—

‘‘(A) of—

‘‘(i) processing data; or

‘‘(ii) performing calculation operations; and

‘‘(B) which is uniquely designed for or utilized in the practice, administration, or management of an enterprise;

‘‘(2) any technique used in athletics, instruction, or personal skills; and

‘‘(3) any computer-assisted implementation of a method described in paragraph (1) or a technique described in paragraph (2).

‘‘(g) The term ‘business method invention’ means—

‘‘(1) any invention which is a business method (including any software or other apparatus); and

‘‘(2) any invention which is comprised of any claim that is a business method.’’.

SEC. 3. PATENTS ON BUSINESS METHOD INVENTIONS.

(a) IN GENERAL.—Title 35, United States Code, is amended by inserting after chapter 31 the following new chapter:

‘‘CHAPTER 32—PATENTS ON BUSINESS METHOD INVENTIONS

‘‘322. Opposition procedures.
‘‘323. Effect on other proceedings.
‘‘324. Burden of proof.

‘‘§ 321. Business method invention determinations

‘‘(a) CONFIDENTIALITY.—Except as provided in subsection (b), an application for a patent on a business method invention shall be kept in confidence by the Patent and Trademark Office and no information concerning the application may be given without authority of the applicant or owner unless necessary to carry out the provisions of an Act of Congress or in such special circumstances as may be determined by the Director.

‘‘(b) PUBLICATION.—

‘‘(1) IN GENERAL.—(A) Subject to subparagraph (E) and paragraph (2), each application for a patent on a business method invention shall be published, in accordance with procedures determined by the Director, promptly after the expiration of a period of 18 months after the earliest filing date for which a benefit is sought under this title. At the request of the applicant, an application may be published earlier than the end of that 18-month period.

‘‘(B) Within 12 months after the first filing date of an application in the United States for a patent under this title, the Director shall make a determination of whether any invention claimed in the application is a business method invention.

‘‘(C) After making a determination under subparagraph (B) that an invention is a business method invention, the Director shall notify the applicant of the determination and shall provide the applicant with a period of 60 days within which to respond to the determination by amending the application, withdrawing the application, or otherwise.

‘‘(D) No information concerning patent applications published under this subsection shall be made available to the public, except as the Director determines.

‘‘(E)(i) The Director shall establish procedures for making determinations under subparagraph (B), and for addressing amendments to any application that may affect the Director’s determination of whether the invention claimed in the application is a business method invention.

‘‘(ii) In no case shall an application that would be subject to section 122 but for this section be published later than the date that would otherwise apply to the application under section 122.

‘‘(2) EXCEPTIONS.—(A) An application shall not be published under paragraph (1) if that application is—

‘‘(i) no longer pending;

‘‘(ii) subject to a secrecy order under section 181 of this title;

‘‘(iii) a provisional application filed under section 111(b) of this title; or

‘‘(iv) an application for a design patent filed under chapter 16 of this title.

‘‘(B) No application for a patent shall be published under paragraph (1) if the publication or disclosure of such invention would be detrimental to the national security. The Director shall establish appropriate procedures to ensure that such applications are promptly identified and the secrecy of such inventions is maintained in accordance with chapter 17 of this title.

‘‘(3) PUBLIC PARTICIPATION.—Any party shall have the opportunity to submit to the Director for the record prior art (including, but not limited to, evidence of knowledge or use, or public use or sale, under section 102), file a protest, or petition the Director to conduct a proceeding to determine whether the invention was known or used, or was in public use, or on sale, under section 102 or is obvious under section 103. The Director shall conduct such a proceeding if the petition—

‘‘(i) is in writing;

‘‘(ii) is accompanied by payment of the fee set forth in section 41(a) of this title; and

‘‘(iii) sets forth in detail the basis on which the proceeding is requested.

‘‘(4) AVAILABILITY OF INFORMATION.—Information submitted pursuant to paragraph (3) shall be considered during the examination of the patent application.

‘‘(5) PROVISIONAL RIGHTS.—During the period of pendency of an application after publication, an applicant shall have provisional rights pursuant to section 154 of this title.

‘‘§ 322. Opposition procedures

‘‘(a) ADMINISTRATIVE OPPOSITION PANEL.—

‘‘(1) ESTABLISHMENT.—The Director shall, not later than 1 year after the date of enactment of the Business Method Patent Improvement Act of 2001, establish an Administrative Opposition Panel. The Administrative Opposition Panel shall be comprised of not less than 18 administrative opposition judges, each of whom shall be an individual of competent legal knowledge and scientific ability. Upon establishment of the Administrative Opposition Panel, the Director shall publish notice of the establishment of the Panel in the Federal Register.

‘‘(2) ASSIGNMENT OF PATENT EXAMINERS TO PANEL.—Patent examiners may be assigned on detail to assist the Administrative Opposition Panel in carrying out opposition proceedings under this section, except that a patent examiner may not be assigned to assist in review of a patent application examined by that patent examiner. The Director shall establish procedures by which an opposition is heard under subsection (b).

‘‘(b) OPPOSITION PROCEDURES.—

‘‘(1) REQUEST FOR OPPOSITION.—(A) Any person may file a request for an opposition to a patent on a business method invention on the basis of section 101, 102, 103, or 112 of this title. Such a request is valid only if the request—

‘‘(i) is made not later than 9 months after the date of issuance of the patent;

‘‘(ii) is in writing;

‘‘(iii) is accompanied by payment of the opposition fee set forth in section 41(a) of this title; and

‘‘(iv) sets forth in detail the basis on which the opposition is requested.

‘‘(B) Not later than 60 days after receiving a valid request under subparagraph (A), the Director shall issue an order for an opposition proceeding to be held on the record after opportunity for a hearing, and shall promptly send a copy of the request to the owner of record of the patent. The patent owner shall be provided a reasonable period, but in no case less than 60 days after the date on which a copy of the request is given or mailed to the patent owner, within which the owner may file a statement in reply to the grounds for the request for opposition, including any amendment to the patent and new claim or claims, for consideration in the opposition proceeding. If the patent owner files such a statement, the patent owner shall promptly serve a copy of the statement on the third-party requester. Not later than 2 months after the date of such service, the third-party requester may file and have considered in the opposition proceeding a reply to the statement filed by the patent owner.

‘‘(2) CONDUCT OF OPPOSITION PROCEEDINGS.—Each opposition shall be heard by one administrative opposition judge, and no party shall be permitted ex parte communication with the administrative opposition judge. In addition to the statements and replies set forth in paragraph (1), the administrative opposition judge may consider evidence that the judge considers relevant, including evidence that is presented in any oral testimony (including exhibits and expert testimony) in direct or cross examination, or in any deposition, affidavit, or other documentary form, whether voluntary or compelled. In any opposition proceeding, the Federal Rules of Evidence shall apply.

‘‘(3) AMENDMENTS TO PATENT CLAIMS.—A patent applicant may propose to amend a patent claim or propose a new claim at any time during the opposition proceeding, except that no proposed amended or new claim enlarging the scope of a claim of the patent may be permitted at any time during an opposition proceeding under this section.

‘‘(4) DETERMINATION.—Not later than 18 months after the filing of a request for an opposition under this section, the administrative opposition judge in the opposition proceeding shall determine the patentability of the subject matter of the patent, a record of the administrative opposition judge’s determination under this section shall be placed in the official file of the patent, and a copy shall promptly be given or mailed to the owner of record of the patent and to the third-party requester.

‘‘(5) APPEALS.—Any party to the opposition may appeal a decision of the Administrative Opposition Panel under the provisions of section 134 of this title, and may seek court review under the provisions of sections 141 through 145 of this title, with respect to any decision in regard to the patentability of any original or proposed amended or new claim of the patent. A patent owner may be a party to an appeal taken by a third-party requester. Any third-party requester may be a party to an appeal taken by a patent owner.

‘‘(6) CERTIFICATION OF PATENTABILITY.—In an opposition proceeding under this chapter, when the time for appeal has expired or any appeal proceeding has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent any proposed amended or new claim determined to be patentable.

‘‘(7) EFFECT OF DETERMINATION.—Any proposed, amended, or new claim determined to be patentable and incorporated into a patent following an opposition proceeding shall have the same effect as that specified in section 252 of this title for reissued patents on the right of any person who made, purchased, or used within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who made substantial preparations therefor, prior to issuance of a certificate under paragraph (6) of this subsection.

‘‘§ 323. Effect on other proceedings

‘‘(a) RIGHT TO LITIGATION.—Subject to subsections (b) and (c), proceedings under section 322 shall not alter or prejudice any party’s right to pursue remedies under provisions of law other than this section. In the case of court proceedings, other than an appeal of a decision in an opposition proceeding under this section, the court may consider any matter independently of any opposition proceeding under this section.

‘‘(b) EFFECT OF FINAL DECISIONS.—

‘‘(1) IN FUTURE OPPOSITION PROCEEDINGS.—If a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28, establishing that the party has not sustained its burden of proving the invalidity of any patent claim, or if a final decision in an inter partes reexamination proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent—

‘‘(A) neither that party to the civil action, the third-party requester, nor the privies of that party or third-party requester may thereafter request an opposition to such patent claim on the basis of issues which that party, third-party requester, or the privies of that party or third-party requester raised in such civil action or inter partes reexamination proceeding (as the case may be); and

‘‘(B) an opposition requested by that party, third-party requester, or the privies of that party or third-party requester on the basis of such issues may not thereafter be maintained by the Office.

‘‘(2) EFFECT OF FINAL DECISION IN OPPOSITION.—If a final decision in an opposition proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent—

‘‘(A) neither the third-party requester, nor the privies of that third-party requester, may thereafter bring a civil action under section 1338 of title 28, or request an inter partes re-examination of, or an opposition to, such patent claim on the basis of issues which that third-party requester, or the privies of that third-party requester, raised in such opposition proceeding; and

‘‘(B) an inter partes reexamination or opposition requested by that third-party requester, or the privies of that third-party requester, on the basis of such issues may not thereafter be maintained by the Office.

‘‘(3) NEW EVIDENCE.—Paragraphs (1) and (2) do not prevent the assertion by a party to a civil action or a third-party requester of invalidity based on newly discovered prior art, or other evidence, unavailable to that party or third-party requester, as the case may be, and the Patent and Trademark Office, at the time of the civil action, inter partes reexamination, or opposition proceeding (as the case may be).

‘‘(c) STAY OF LITIGATION.—Once an order for an opposition proceeding with respect to a patent has been issued under section 322(b)(1)(B), any party to the proceeding may obtain a stay of any pending court proceeding (other than an appeal to the Court of Appeals for the Federal Circuit) which involves an issue of patentability of any claims of the patent which are the subject of the opposition proceeding, unless the court before which such litigation is pending determines that a stay would not serve the interests of justice.

‘‘§ 324. Burden of proof

‘‘(a) BURDEN OF PROOF.—In the case of reexamination, interference, opposition, or other legal challenge (including a civil action brought in whole or in part under section 1338 of title 28) to a patent (or an application for a patent) on a business method invention, the party producing evidence of invalidity or ineligibility shall have the burden of showing by a preponderance of the evidence the invalidity of the patent or ineligibility of the subject matter of the application.’’.

(b) FEES.—Section 41(a) of title 35, United States Code, is amended—

(1) by redesignating paragraphs (7) through (15) as paragraphs (9) through (17), respectively; and

(2) by inserting after paragraph (6) the following:

‘‘(7)(A) On filing an opposition under chapter 32 to a patent on a business method invention based on prior art citations or obviousness, a fee of $200.

‘‘(B) On filing an opposition under chapter 32 to a patent on a business method invention on any other basis, a fee of $5,000.

‘‘(C) The Director may waive the payment by an individual of fees under this paragraph if such waiver is in the public interest.

‘‘(8) On filing a request for a proceeding to determine whether an invention claimed in an application was known or used, or has been in public use or on sale, under section 102, a fee of $35.’’. (b) CLERICAL AMENDMENT.—The table of chapters for part III of title 35, United States Code, is amended by adding at the end the following:

‘‘32. Patents on Business Method Inventions ......................... 321.’’.

SEC. 4. NONOBVIOUSNESS.

Section 103 of title 35, United States Code, is amended by adding at the end the following:

‘‘(d)(1) A business method invention shall be presumed obvious under this section if the only significant difference between the combined teachings of the prior art and the claimed invention is that the claimed invention is appropriate for use with a computer technology, unless—

‘‘(A) the application of the computer technology is novel; or

‘‘(B) the computer technology is novel and not the subject of another patent or patent application.

‘‘(2)(A) An applicant or patentee may rebut the presumption under paragraph (1) upon a showing by a preponderance of the evidence that the invention is not obvious to persons of ordinary skill in all relevant arts.

‘‘(B) Those areas of art which are relevant for purposes of subparagraph (A) include the field of the business method and the field of the computer implementation.’’.

SEC. 5. REQUIREMENT TO DISCLOSE SEARCH.

The Director of the Patent and Trademark Office shall, within 30 days after the date of enactment of this Act, publish notice of rulemaking proceedings to amend the rules of the Patent and Trademark Office to require an applicant for a patent for a business method invention to disclose in the application the extent to which the applicant searched for prior art to meet the requirements of title 35, United States Code. Such amendment shall include appropriate penalties for failure to comply with such requirement. The Director shall ensure that the amendment is implemented as promptly as possible.

SEC. 6. CONFORMING AMENDMENTS.

(a) DEFINITIONS.—Section 100(e) of title 35, United States Code, is amended by striking ‘‘or inter partes reexamination under section 311’’ and inserting ‘‘, inter partes reexamination under section 311, or an opposition under section 322,’’.

(b) BOARD OF PATENT APPEALS AND INTERFERENCES.—Section 134 of title 35, United States Code, is amended—

(1) in subsection (b)—

(A) by inserting ‘‘or opposition’’ after ‘‘reexamination’’; and

(B) by inserting ‘‘or the Administrative Opposition Panel (as the case may be)’’ after ‘‘administrative patent judge’’; and

(2) in subsection (c)—

(A) by striking ‘‘proceeding’’ and inserting ‘‘reexamination proceeding or an opposition proceeding’’;

(B) by inserting ‘‘or the Administrative Opposition Panel (as the case may be)’’ after ‘‘administrative patent judge’’; and

(C) in the last sentence, by inserting ‘‘in an inter partes reexamination proceeding’’ after ‘‘requester’’.

(c) APPEAL TO COURT OF APPEALS.—(1) Section 141 of title 35, United States Code, is amended in the second sentence by inserting after ‘‘reexamination proceeding’’ the following: ‘‘, and any party in an opposition proceeding, who is’’.

(2) Section 143 of title 35, United States Code, is amended by inserting after the third sentence the following: ‘‘In any opposition proceeding, the Administrative Opposition Panel shall submit to the court in writing the grounds for the decision of the Panel, addressing all the issues involved in the appeal.’’.

(d) DEFENSE TO INFRINGEMENT.—Section 273 of title 35, United States Code, is amended—

(1) in subsection (a)—

(A) by striking paragraph (3) and redesignating paragraph (4) as paragraph (3); and

(B) in paragraphs (1) and (2) by striking ‘‘method’’ and inserting ‘‘business method’’; and

(2) in subsection (b), by striking ‘‘method’’ each place it appears and inserting ‘‘business method’’.

(e) OTHER PUBLICATION OF PATENT APPLICATIONS.—Section 122 of title 35, United States Code, is amended by adding at the end the following:

‘‘(e) BUSINESS METHOD INVENTIONS.—In the case of applications for business method inventions, section 321 of this title applies in lieu of this section.’’.

SEC. 7. EFFECTIVE DATE.

(a) IN GENERAL.—Subject to subsections (b), (c), and (d), this Act and the amendments made by this Act apply to—

(1) any application for patent that is pending on, or that is filed on or after, the date of enactment of this Act; and

(2) any patent issued on or after the date of enactment of this Act.

(b) PENDING APPLICATIONS.—In applying section 321 of title 35, United States Code, as added by section 3 of this Act, to an application for patent that is pending on the date of enactment of this Act—

(1) the Director of the Patent and Trademark Office shall make the determination required by subsection (b)(1)(B) of such section 321 within 12 months after the date of enactment of this Act, or on the date specified in such section 321, whichever occurs later;

(2) subject to paragraph (3), such an application shall be published—

(A) on the date specified in section 321 of title 35, United States Code, or

(B) the date on which the determination is made pursuant to paragraph (1), whichever occurs later; and

(3) in no case shall an application that would be published under section 122 of title 35, United States Code, but for the enactment of this Act, be published later than the date specified in such section 122, regardless of when the Director makes the determination under paragraph (1).

(c) PATENTS ISSUED BEFORE ESTABLISHMENT OF ADMINISTRATIVE OPPOSITION PANEL.—In the case of a patent issued after the enactment of this Act but before the date on which notice of the establishment of the Administrative Opposition Panel is published under section 322(a)(1) of title 35, United States Code (as added by this Act), a request for an opposition to the patent may be filed under section 322(b)(1)(A) of title 35, United States Code (as added by this Act), notwithstanding the 9-month requirement set forth in clause (i) of that section, if the request is filed not later than 9 months after the date on which such notice is so published.